The World Cup in Russia has officially begun with the host nation kicking-off in style with a 5-star and five-goal performance.
All the talk in the run-up to the World Cup has been about how prepared the nation is to host such a tournament and, most importantly, the safety of those travelling into the country to cheer on their national sides.
But with all the talk of people visiting Russia, one report published recently shone a little light on how Russians are leaving the country. Not leaving for good – we’re talking travel and tourism. Luxury tourism at that.
According to the World Tourism Organization (UNWTO), tourism FROM Russia is booming – up 13% in 2017 with huge increases expected this summer too – interestingly coinciding with the World Cup itself.
The luxury element comes in the form of the hotels that those travelling from Russia are booking, predominantly 4 and 5 stars. In fact, bookings in the luxury hotel bracket could be set to surge by 167% this summer.
Data from UNWTO is also backed-up by online activity from Russia, which uses Yandex as its predominant search engine.
Giulio Gargiullo, an expert in the Russian luxury sector, noted that a stabilising economy in Russia in recent months has led to an increase in Russians travelling into Europe in particular as online searches for 4 and 5-star accommodation abroad increases.
He said that: “…the number of searches carried out by Russians on Yandex, the main Russian search engine, for luxury hotels in the 4 or 5-star category (has grown). In the 5-star category, we witness a percentage increase in online searches of 167.4% between July 2016 and July 2017 with 337,700 online searches. An even greater increase is expected in the coming months, peaking in July 2018.
Read more: 5 potentially lucrative export markets
“Similarly, in the 4-star category, 107,607 online searches were carried out in July 2016 and 193,997 in July 2017 showing a percentage increase of 80.3%, and there is even greater growth in searches and online bookings for 2018 with the maximum peak occurring during the month of July.”
Spend from Russians whilst travelling abroad has also soared, splashing out $31bn worldwide last year. A figure that’s got luxury travel providers across the continent sitting up and paying notice. Perhaps making sure their websites have Russian translations available too.
Recognising emerging trends
If you offer a product or service that’s consumer-focused in particular, recognising emerging markets such as the luxury Russian tourism market can be critically important for the future growth of your business.
Why? Because your competitors may have yet seen the trend and you could steal a march on them, especially if you’re a smaller player in a saturated marketplace.
Read more: three things to consider when marketing abroad
Analysing search-trend data is a good starting point, but knowing how to quickly capitalise on an emerging opportunity is just as important.
If you’re looking for new potential markets to explore and exploit for your business, get in touch with us today and find out how we can help you not only recognise and analyse emerging trends but also quickly capitalise on them with an implementation strategy.
US tariffs on imported steel and aluminium have come into force, affecting EU, Canadian and Mexican markets.
The tariffs, which were originally announced in March this year but delayed in implementation for some US allies, officially came into effect from 1st June with US commerce secretary Wilbur Ross confirming a 25% tariff on steel and 10% on aluminium imports from the EU.
So why has the US President introduced such tariffs? Criticised by some as ‘protectionist’, Trump himself notes a national security rationale behind the call whilst also looking to uphold his presidential campaign promise to restore manufacturing jobs to decaying American steel towns across the so-called ‘rust belt’’ of The States.
In under two decades, some 90,000 American jobs have been lost in the steel and aluminium industries alone as the US made less and imported more. The trade deficit for the US stands at around one to four and the nation currently stands as the world’s biggest importer of steel.
So what will the impact be on UK and EU exporters? Whilst the effect the tariffs will have on local jobs is unclear, the amount of new tax being paid out will be substantial. UK steel exports stand around £360m to the US every year, whilst from the EU, that figure stands at £5.6bn.
And whilst the UK government has said it will ‘continue to work closely with the EU and US administration to achieve a permanent exemption’ and protect UK workers, there will no doubt be some disappointment and worried faces in Downing Street as the UK looks to etch out closer trade ties and some degree of preferential treatment from what will be an increasingly vital trading partner post-Brexit.
Will Trump’s tariffs work against the US in the long-run?
On the face of it, introducing tariffs on steel and aluminium imports seems a clever if not brash move. With such a large trade deficit in this field, the US can expect to rake in hundreds of millions in additional taxes each year before American firms start to source locally once more. The move will also bode well with Trump’s core voters. In the short-term, increasing prices of imported goods will make local products cheaper in comparison and more attractive as an alternative.
In the long-run though, things might not work out quite the way Trump would hope.
First, there’s the retaliation from hacked-off trade partners, including the EU, Canada and Mexico, who are all threatening counter-tariffs in retaliation.
This means prices for both imported and exported goods will rise, whilst local producers are likely to also increase their prices whilst still undercutting now taxed imported alternatives. Prices rise across the board, which eventually trickle down to the consumer, whilst quality dips too through lack of innovation and reduced efficiency.
Read more: British business beyond the customs union
UK Steel Director Gareth Stace suggested the President’s move has without a doubt started an international trade war.
“It is difficult to see what good can come of these tariffs. US steel consumers are already reporting price increases and supply chain disruption and with some half-billion dollars of steel exported from the UK to the US last year, UK steel producers are going to be hit hard.
“As stated time and time again, the only sustainable solution to the root cause of the issue, global overcapacity in steel production, is multilateral discussions and action through established international channels.”
However, we can’t officially call Trump’s tariffs the start of a trade war without the first retaliation, which came almost instantly through friendly neighbours Canada slapping £9.6bn in tariffs on the US.
Meanwhile, the EU is planning to re-balance the marketplace by introducing their own new import taxes on American products including orange juice, denim, motorbikes and even peanut butter.
And so it begins…
Increasing global demand has seen Japan’s exports rise for what is expected to be the 17th month running to April this year.
With final performance to be confirmed, initial data suggests that exports grew over 8% last month compared to April 2017 and a 2% increase compared to March.
Trade surplus, as a result, reached $3.66bn. However, the overall size of Japan’s economy shrank an annualised 0.6% between January and March, its first dip in nearly a decade, primarily as a result of decreasing investment and consumption.
Learn more: International trade consultancy
Takeshi Minami, chief economist at the Norinchukin Research Institute noted that: “Although exports for January-March slowed down, there is no doubt that the global economy is on a moderate recovery path and export volumes were maintained.
“Domestic demand including consumer spending likely started picking up from April, so both exports and imports are expected to recover.”
Read more: Israel dairy market grows following heightened international demand
Despite strong growth over the last year and a half, there are some roadblocks to continued success for the Japan economy in the short-term, including potential global fallout as a result of trade frictions between China and the U.S.
However, Tokyo’s CPI index is also showing signs of small growth, around 0.6% compared to last year.
An analyst at Nikko Securities said that: “Price gains in oil-related products likely contributed to the core CPI index.
“It will be some time before we see the wage increase from the annual spring wage negotiations this year supporting price rises.”
Exports of dairy products from Israel have enjoyed strong growth over the last five quarters thanks to increasing demand from Europe and North America.
An analysis released by the Israel Export Institute’s Economy Department highlighted that the nation’s export of dairy products grew by 2% in 2017 compared to the year before with exports worth $21m.
Growth has also continued into the first quarter of 2018 with further 10% growth with dairy exports bringing some $5.6m into the economy.
Whilst most Israeli export product is exported to Europe, the recent increases have been brought about through increased trade with North America.
Read more: Nigeria exports top $40bn
Last year, exports to North America grew by 51% with European exports increasing by 29%. Dairy exports also increased in Asia with 15% growth.
In monetary terms last year, the North American market offered the most value with $10.6m through export trade, followed by $6m European sales and $3m in exports to Asia.
Earlier this month we wrote about a statement from the Public Accounts Committee which noted its ‘grave concern’ about the lack of Brexit-readiness The Department for Business, Energy and Industry Strategy (BEIS) appears to showcase in the run-up to leaving the EU.
Their statement went as far as to suggest that the BEIS was apparently ‘operating in a parallel universe where urgency is an abstract concept with no bearing on the Brexit process’.
On top of that, the CBI and IoD have made public their desire for the UK to stay in the customs union and maintain close trade-links with the EU respectively.
Director of the CBI, General Carolyn Fairbairn said in a speech that: “There may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU … But that day hasn’t yet arrived.”
So why is it taking so long to agree on some sort of customs arrangement with the EU or at least a set of basic principles for a future deal?
‘Playing the long game’
As John Ashcroft writes in his Saturday Economist piece, Prime Minister Theresa May has to play the long game, partly due to the divisions within her own cabinet.
“The Prime Minister has set up two working groups to develop the options for the Customs Union deal. One team will work on the “Customs Partnership” deal, the other team will work on the “Max-Fac” proposal. The brief to “work towards a joint solution”. Some chance. Robot wars would have a better chance of resolving the conflict peacefully.
“Germany’s EU commissioner Günther Oettinger played down the chances of progress. “Madame May is weak. Boris Johnson has the same hairdo as Trump” he explained. Details of his own interpretation of the gravity trade model were omitted. “We can only hope that sensible citizens will put Madame May on the path to a clever Brexit”.”
The government are after something of a ‘clever Brexit’, but as Ashcroft points out, this is in itself a contradiction.
Read more: Business Department unprepared for Brexit?
Sure, there’s unlikely to be a cliff-edge Brexit in which Britain takes a step into the complete unknown. But there will be some losers, and it could just be that the majority (51.9% in fact) underestimated the impact leaving the likes of the single market will have on the UK economy and its businesses.
As Fairbairn concluded whilst noting alternative trade arrangements around the world, things are likely to get more difficult for those firms that are trading overseas, whatever sort of Brexit is achieved.
“Currently, to trade with the EU, many U.K. businesses need only complete a simple form. But with a Canada-style agreement U.K. firms would face customs declarations, which means filling out a 12-page form for each batch of goods sent to customers,” Fairbairn will say, adding that the Canada deal is “patchy” on services trade.
“Put simply, a Canada deal is an ocean away from what we need.”
What all this means for British businesses
It could mean everything, or it could mean nothing at all. We just don’t know yet. We almost have to wait and see, but that doesn’t mean companies shouldn’t start planning regardless.
As just one example, many EU based SMEs actually prefer to make large purchases from EU members outside of their country as there is no VAT on the invoice, as compared to a local company that must charge the tax.
This has a real benefit for their cash flow. Ok, you can claim it back, but in these post-financial crisis times some governments are taking up to 12 months to make the refund! This benefit will most likely disappear and with it some of your export business.
That is unless, as noted above, you start planning now. Read more on business after Brexit here.
Annual Nigeria exports goods reached $40bn in value according to the Nigerian Export Promotion Council (NEPC).
That’s the figure of informally traded goods though, calculated by the International Trade Centre in Geneva, with the Nigerian Association of Chambers of Commerce, Industry Mines and Agriculture (NACCIMA) posting the value of trade at $8bn.
CEO of the NEPC, Segun Awolowo, said that: “We want to work with NACCIMA to formalise this informal trade. We have to work with your chambers in all the states of the federation. We have to give these small business owners incentives that will make it better for them to do business.
“We have 11 non-oil sectors where we can earn foreign exchange and one of them is the petrochemical sector, which is a $150bn global market,” he added.
“Nigeria is not playing in this market because it is importing, but we are a petrol economy and that is where the paradox lies.”
An Export Development Fund has been established in Nigeria to support small business in particular with a pre-shipment incentive to help startups grow and export.
Read more: 5 potentially lucrative export markets
Nigeria has enjoyed a GDP boom over the last decade with strong growth forecasts into 2018. Responsible for 40% all of imports into Western Africa, there are real opportunities for new businesses to do trade in the country, in particular within automotive, marine, financial and health-care sectors.
At some point during exporting and doing business overseas, you’re going to have to face and overcome issues that arise from managing multiple currencies whilst selling abroad.
The good news is that, unlike market-leading conglomerates around the world, you needn’t start hiring Forex traders left, right and centre.
Here are three ways in which you can protect your business (as best as possible) from shifting currencies:
One: Try and do business in your local currency
There are pros and cons to this one and they weigh pretty evenly. Particularly if you’re a small business making its first foray into international markets, the simplest solution to managing multiple currencies whilst selling abroad may seem to be charging customers in your local currency, thus passing the issue of market deviations onto them.
However, this may lose you your competitive edge in the market by requiring this from clients, especially if the bidding process was against numerous companies, in particular against potential local suppliers.
Two: Lock-in exchange rates in advance
A number of SMEs are unlikely to have cash reserves and a healthy enough cash flow, in general, to swallow any negative movements on the foreign exchange.
One way around this is to look at purchasing a forward contract from a specialist or business bank that locks in the exchange rate for a certain period of time – long enough to complete particular purchases and orders.
Read more: IoD reiterates the importance of post-Brexit trading with Europe
Such services don’t come free and a commission will have to be paid at a level set by the forward contract provider, but it could be worth it for peace of mind whilst your exporting endeavours and business grows.
And those commissions can come cheap if you shop around. AFEX offer a forward contract with a 1% commission which, depending on the size of the contract in question, may be a safe and affordable bet.
Three: Don’t try to play the market
You may be on a high from recent business growth and feeling like you can tackle any potential obstacle that the path to business growth places in your way. Some business owners may get ‘casino fever’ and see an opportunity to make additional profit on top of the secured contract by playing the market by buying in one currency and selling in another.
However, there’s a reason the risk warnings on Forex trading websites are so long – it’s a risky game, especially when your business’ future is on the line.
Unless you have prior experience in Forex trading or are a legitimate market expert, playing the market is likely too risky. It’s also likely to prove a waste of your time when you could be focusing on securing the next contract or moving into another international market.
Read more: 5 potentially lucrative export markets
If you’re new to exporting or have just started selling abroad, some expert help along the way could help you save thousands and a lot of time by making the right decision every step of the way. Read more about how support services, ranging from export paperwork to order financing can help your growing business.
As businesses grow, it’s natural to begin looking abroad to new potential markets. Likely the bigger economies are the first port of call, with the likes of the US, Asia and open European market big draws.
But sometimes, bigger isn’t always better when looking to take those first exporting steps, for reasons ranging from technical product restrictions and market saturation to import tariffs.
As such, here are five potentially lucrative emerging export markets and the most promising sectors within the regions:
Colombia
Unlikely to be top of most export hit-list target strategies and often overlooked by larger South American economies, the Columbian market has transitioned in recent years from being overly-regulated to a more free trade environment. A free trade agreement enshrined in law seven years ago and a growing middle class in the country has seen more and more companies sending trade envoys and researchers to the region.
Some of the most promising markets in Columbia include data processing services and technology, transportation consultation and expertise plus security equipment.
Indonesia
Home to the world’s fourth-largest population and the biggest economy in the Southeast Asian zone, Indonesia has enjoyed steady economic growth over the last decade with a GDPR growing from USD 510bn in 2008 to USD 932bn in 2016.
Indonesia also has a young population, tech and brand-hungry although major current markets centre around agricultural products, in particular from the U.S.
And despite an outwardly daunting regulatory environment, Indonesia is a market with a trend towards deregulation.
Top emerging markets in the region include IT services, banking, clean energy and education, whilst infrastructure is a key niche for improvement too.
Nigeria
Responsible for 40% of all imports in Western Africa, Nigeria enjoyed a GDP boom during the last decade with a strong growth forecast moving forward towards the middle of 2018. Whilst demand for U.S. product is high, there are still real opportunities in emerging markets for other exporters in areas including automotive, marine technology, financial services and health-care too.
Due to a high crime rate and potential for fraud in the region though, it pays to work with local authorities and regional export-experts in this zone to ensure a smooth process.
Vietnam
Vietnam’s GDP has surged within the last eight years, worth US 205bn in 2016 compared to just USD 99bn in 2008.
Often overlooked by larger players including China and Brazil, there is a big demand for a number of products and expertise in the region including plastics machinery, educational services, IT, wastewater treatment and even franchises too.
Morocco
Last but not least on this list of emerging export territories, Morocco’s GDP value has more than doubled since the turn of the century with an estimated worth of USD 101bn in 2016.
The first African country to secure a trade deal with the U.S., low labour costs and its geographical proximity to European markets has made it a key hub for companies exporting through into the African continent.
If your business works within renewables, water treatment, construction and security, there are big opportunities in this country to do trade.
Identifying Potentially Profitable Emerging Markets
If you’re currently considering your businesses’ exporting options, it pays to have the knowledge and expertise along the way. Learn more about how Go Exporting can support your international growth plans here.
